Domestic strengths and innovation in focus for Commerzbank
Commerzbank's senior transaction bankers explain the institution's focus on mid-sized corporates amid intensifying technological challenges and opportunities.
Commerzbank's strategy has long focused on mid-sized corporates in its home market rather than advancing rapidly into new territories. Luckily, the SME business is very fertile ground for banks in Germany.
Digitization and compliance are what we are now being asked about
Frank-Oliver Wolf, head of Commerzbank transaction services Germany, explains: “The target group of corporates and the institutions have changed little over time. What is changing in the environment is the general regulations and the conditions. Digitization and compliance are what we are now being asked about in our client meetings."
In response to the latter two challenges, the bank has collaborated with non-traditional players to reach a greater number of corporates. The bank is providing export finance assistance by teaming up with Google as banking partner on its internet initiative export programme.
The search engine assesses potential export markets for corporates based on search terms internationally. If there is a possible a gap in the market for products or services in a region, it will pass this on to a given corporate seeking to discover new export markets.
Wolf explains: “Google performs a check on the potential export market and provides a support network of partners on the project. It is a digital initiative, and Google is very well-placed to help companies in that respect.”
If there is a potential for overseas expansion, Commerzbank steps in and provides the corporate with advice on export finance, documentation and making foreign payments. The partnership also includes the assistance of DHL and PayPal to create a complete package of assistance for new exporters.
Internally, the bank has also integrated the financial institutions group with the cash-management business in response to client demand to sharpen risk-management delivery, explains Reinhard Furthmayr, head of product management cash services at Commerzbank.
As a bank with such a strong European focus, the changing payments landscape brought in through Sepa required a significant amount of work for its clients, says Wolf, adding: “Last year, Sepa was the most relevant topic in client meetings – this year it is how to gain advantage from the harmonization created across Europe by Sepa."
Ahead of the implementation, the bank was proactive in assisting its corporates to adopt the new payments standard.
Furthmayr says: “In the run up to Sepa, we conducted seminars for three or four years, with one on one consultations to prepare customers for its implementation.”
The bank has also worked to develop tools to give clients an understanding of the benefits that changes to their working practices could bring.
Wolf says: “The bank has developed the treasury tool. It can be used by the treasury departments to show the advantages of implementing certain projects and the optimization of payment flows. They can use the tool to test if implementing a cash pool or establishing a payments factory would be worth it.”
Wolf believes the bank’s success in its approach to clients has been about changing its mindset, and allowing them to set the terms of what they are looking for in their banking relationship.
“The clients are impressed by our targeted approach towards them," he says. "When you can come in with no PowerPoint presentation and no paper, with the discussion focused on them and understanding their supply chain, it makes all the difference.”